A bank is a financial establishment that invests money deposited by customers, pays it out when required, makes loans at interest, and exchanges currency. According to Abbreviationfinder, HSBC stands for Hong Kong and Shanghai Bank Corporation.

In a commercial sense, a bank is a credit institution that offers paid services for the movement of capital. As an entrepreneur, you are probably asking yourself the question: Do I have to open a business account with my bank? Here we explain to you whether you really need a business account. As a credit institution, a bank offers services for payment transactions, credit transactions and capital transactions. In Germany, a credit institution is a commercial company that does banking.

The bank and its general functions

Banks generally perform six main functions. These main functions include:

  • Services such as cash transactions
  • Granting loans
  • Monetary function (total payments)
  • (Monetary policy incentives interest rates increase or interest rate or lower)
  • Investment function (securities trading)
  • Economic function

The classic business basis of banks is in particular the management of savings deposits and lending.

Economic functions of a bank

At the economic level, banks have three main functions:

Deadline transformation – 1st function of a bank

Investors and borrowers often think in different time periods. While investors tend to want to get their money very short-term, borrowers often want long-term loans. Banks offer their customers very flexible investment conditions, for example with checking accounts or overnight money accounts, which can be emptied completely from one day to the next. On the other hand, they lend money for longer periods, often over several years. Deadline transformation poses a risk if banks suddenly lose their customers’ trust. In this case, there can be a “bank run” in which all investors want to have their money paid out at once. Of course, this poses problems for the bank because it lent the money to its customers over the long term.

Risk transformation – 2nd function of a bank

While savers definitely want to get back the money that they invest in banks, there is a risk that the individual debtor will not be able to meet his obligations with every loan granted. Since the bank grants a large number of loans and is relatively well informed about the probability of default on its borrowers, the overall risk from the loans granted is not very great. For their part, investors can therefore assume that they will almost certainly get their savings back.

Batch size transformation – 3rd function of a bank

Investors are often private individuals who have very small savings. In contrast, companies require loans of considerable value. Banks can solve this problem by taking the money of many investors and lending it to a smaller number of borrowers.

The bank and its customer groups

Bank customer groups include private customers, corporate customers, states and other banks. The individual customer groups are described in more detail below.

Private customers

A private customer is a single person – in contrast to corporate customers or institutions. A bank’s retail banking business is again divided into

  • Standard customer: focus on mass business (payment transactions, loans, credit cards)
  • Wealthy client: focus on investment advice

Corporate banking

Corporate customers are business customers – i.e. companies and institutions. They usually do their business through a company account. The focus here is on lending to companies.


States also belong to a bank’s customer group. The range of offers here includes the granting of government bonds.


In addition to private customers, corporate customers and states, banks also have other banks as customers. This trade between banks among themselves is also called interbank trade.

Bank Guides & Directories

Latest articles

  • Travel to Iran Travel to Iran - Population: 81 million Capital: Tehran Language: Persian Iran is the world’s second largest producer of pistachios (the country’s second largest export) and is considered the capital of pistachios? Iran was once a pioneer in renewable energy and actually built the earliest known wind turbines? Iran’s history The academic king Cyrus II ruled Persia from the middle of the sixth century BC, and it is also from this time that the…
  • Traveling in Cayman Islands Cayman Islands Geography - The three Cayman Islands, Grand Cayman, Little Cayman and Cayman Brac are located below Cuba and belong to an underground limestone mountain range protected by coral reefs Cuba extends to the Gulf of Honduras. According to COLLEGETOPPICKS.COM, the Cayman Islands are a paradise for divers. Comparably beautiful Coral reef does not exist in the whole of the Caribbean. Especially at Seven Mile Beach on Grand Cayman you can reach the…
  • Thailand Economy and History Thailand Economy and History - ECONOMY: AGRICULTURE, LIVESTOCK AND FISHING With an active population in agriculture of approx. two-fifths of the total (compared to 67.7% of non-urban population), Thailand can no longer be defined as a country with essentially rural connotations: the primary sector contributes just over a tenth of GDP. The main product, literally vital for the Thai economy as it represents both the staple food of the population and the largest item of…
  • Travel to Vietnam Travel to Vietnam - Area: 331,690 km² Residents: 95,415,000 (2017 estimate) Population density: 288 E / km² Form of Government: Socialist republic System of Government: Socialist one-party system Neighboring countries: China, Cambodia, Laos Capital: Hanoi National language: Vietnamese Religions: 21% Buddhists 7% Christians 2% Hoa Hao 1% Cao Dai 0.05% Islam Currency: Đồng (VND) 10 Hào = 100 Xu Exchange rates: 1 EUR = 27,225.30 VND 10,000 VND = 0.37 EUR 1 CHF = 24,606.90 VND 10,000 VND = 0.40 CHF (rate from…
  • Japan Geography Japan Geography - Official name: Japan Form of government: Constitutional monarchy Capital: Tokyo Geographical details: Japan consists of an island chain on the east coast of the Asian continent. The island chain consists of the main islands Hokkaido, Honshu, Shikoku, Kyushu and 6,848 other islands. Population: approx. 128.0 million area approx. 377,835 km² Languages: Japanese (official language), English (in tourism) Religion: approx. 84% Shintoism and Buddhism, approx. 15% other religions, thereof approx. 0.7%…
  • Guadeloupe Geography Guadeloupe Geography - Guadeloupe – island paradise of the Antilles Guadeloupe is the largest island in the Lesser Antilles. The cultural and economic center is Point-a-Pitre. Tourists can find many architecturally attractive structures in the city. The main attraction in the south of the island is a large Hindu temple. With a little luck you can also see ancient sacrificial ceremonies here. The main tourist attraction of the island is undoubtedly the national…
  • Facts of Germany Facts of Germany - Below you will find practical information in connection with trips to Germany Language: German Capital: Berlin Population: 80, 5 million. Religion: Roman Catholic and Protestant Currency: Euro Surface: 357 022 km2 Worth knowing Time difference There is no time difference between Germany and Sweden. Transport in Germany The buses in Germany are of a good standard and are usually equipped with air conditioning. The public transport system is well developed…
  • Best Time to Visit Guadeloupe Best Time to Visit Guadeloupe - Guadeloupe climate According to ANSWERRESUME.COM, the Caribbean archipelago of Guadeloupe is a French overseas department and belongs to the Lesser Antilles. Guadeloupe has a tropical climate. This means that temperatures hardly change over the course of the year. Like all islands in the Eastern Caribbean, Guadeloupe receives fairly evenly distributed rainfall throughout the year, with a wetter period between July and November coinciding with the hurricane season. In the mountainous regions,…
  • Facts Vietnam Facts Vietnam - Read more about time difference, transport, price levels and more in connection with your trip to Vietnam. Language: Vietnamese Capital: Hanoi Population: 94, 5 million Religion: Taoism, Buddhism and Roman Catholicism Currency: Dong Surface: 331,210 km2 Worth knowing Time difference The time difference between Sweden and Vietnam varies, depending on whether it is summer or winter time. Summer time +5 hours Winter time +6 hours Transport in Vietnam Bus The…
  • Netherlands Country and People Netherlands Human Geography - The Dutch territory has attracted man since very remote times, as evidenced by the numerous remains of human activity dating back to the Upper Paleolithic (in Drenthe, Overijssel, etc.). Starting from the second millennium a. C., due to its position of convergence within Europe, the cultural contributions that the country received were different: they came both from Celtic peoples from S, and from Germanic populations (Frisoni, Batavi) from N and…